The economic news out of China this summer has been, in a word, grim. But the headline figures, as bad as they are, may be hinting at a more fundamental issue: Beijing has failed to convince households that their financial future is secure in the post-Covid era.
The country’s main July data, released Tuesday, paint a picture of an economy close to stalling out. Growth in retail sales slowed to 2.5% from a year earlier—with headline consumer inflation already negative. Industry barely grew at all: 0.1% from the prior month in seasonally adjusted terms. And banks extended the smallest amount of new loans, on net, since 2009. Beijing has responded by cutting two key policy rates—and announcing it will no longer publish youth unemployment data, which was running in the neighborhood of 20%.